The U.K., France, Canada and nine other countries said they would impose new trade restrictions on Israel, escalating a dispute over the expansion of Israeli settlements in the West Bank.

Tuesday's announcement prompted a swift retaliation from Israel against the U.K., which was the first to announce it would halt trade with settlements in the Israeli-occupied West Bank. Israel said it would close the British consulate in East Jerusalem, which deals largely with Palestinian affairs, and expel British representatives from the U.S.-led coordination center for postwar Gaza.

U.K. Foreign Secretary Ed Miliband said Tuesday that the expansion of Israeli settlements was "ethnic cleansing" that was undermining the two-state solution to peace between the Israelis and the Palestinians. He said the sanctions would affect direct trade with the West Bank settlements, as well as the British companies that provided services to them.

Israel rejected the criticism and accused the U.K. of interfering in its sovereign affairs. "The accusations made today...were outrageous lies," Israeli Foreign Minister Gideon Sa'ar said.

Before the U.K. announcement, U.S. Ambassador to Israel Mike Huckabee told the BBC that the U.S. would retaliate against the U.K. if it went ahead with the sanctions. He said British companies could be banned from doing business in some U.S. states.

Asked about the U.K.'s decision on Tuesday, Secretary of State Marco Rubio said that President Trump hadn't weighed in on the matter yet. He said the U.K. had told the Trump administration about its plans in advance of the announcement. British Prime Minister Andy Burnham spoke with Trump on Monday.

"We share the goal of stability," said Rubio. "We don't want to see some uptick in violence or an uptick in conflict or tensions in the West Bank at a very tenuous time in the region."

Ties between the U.K. and Israel have deteriorated as the Labour government has taken a harder line on Israel, partly in response to growing public anger over the Gaza war. A recent YouGov survey found that 50% of Britons support a ban on trade with illegal Israeli settlements in the West Bank, with 16% opposed and the rest undecided.

After the U.K. said Tuesday that it would go ahead with the sanctions, Canada and France immediately said they would take similar steps. A group of other countries, including Norway, Iceland, Poland and Sweden, said they would act to stop trade with settlements and would push for an EU-wide ban on such transactions.

Prime Minister Benjamin Netanyahu's government is the most right-wing in Israel's history, with settler leaders like National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrich in powerful posts. Both Smotrich and Ben-Gvir have been sanctioned by Western countries for inciting violence against Palestinians.

Smotrich has described the government's management of the West Bank as a "revolution," saying his dream is full Israeli sovereignty over the territory. "What I am doing now is preparing the ground de facto for this event," he said in July.

European governments have objected to Israel's plans to expand the E1 settlement, which critics say would effectively divide parts of the West Bank and complicate the prospect of a Palestinian state. Israel approved thousands of new housing units in E1 last year.

Much of the world considers Israeli settlements in the West Bank illegal under international law, though Israel's government disputes this. Israeli settler violence against Palestinians has surged since the start of the Gaza war in 2023.

In a joint statement, Burnham, Canadian Prime Minister Mark Carney and French President Emmanuel Macron said a two-state solution in which Israelis and Palestinians live peacefully side by side was in their countries' national interest. They said the settlement expansion and violence posed a "direct and urgent threat to that vision for peace."

Israeli officials have said that sanctions against the settlements will most heavily impact Palestinian jobs in Israeli companies there. They have also accused European governments of demanding steps from Israel toward peace without making matching demands of Palestinian authorities.

Netanyahu has opposed a two-state solution in recent years, calling it an existential threat to Israel's security. Support for a two-state solution in Israel has declined over the years.

Many European governments have also criticized Israel's conduct of the war in Gaza. Israel attacked Hamas in the enclave after the group led the Oct. 7, 2023, attacks. Tens of thousands of Palestinians have been killed in the war.

Last year, Britain, France, Canada and Australia moved to formally recognize a Palestinian state, marking a significant shift in longstanding foreign policy. The U.S. and Israel strongly opposed the move.

Tuesday's announcement is largely symbolic, with only limited trade between Europe and the settlements in the West Bank. A U.K. parliamentary report estimated U.K. trade with the settlements at around GBP38 million, or about $51.4 million.

"The implications are, first and foremost, setting boundaries and establishing a clear policy against the settlement enterprise," said Yonatan Mizrachi of the settlement watch team at Peace Now, an advocacy group in Israel that favors the two-state solution. "The settlement enterprise cannot exist without economic support, most of which comes through or with the backing of the U.S."

Ireland was one of the first EU countries to propose a ban on trade with settlements, which it implemented this summer. Spain and Belgium are among those who followed suit. Germany, meanwhile, has led a cluster of countries that have opposed European Union economic sanctions against Israel, blocking wider EU moves.